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COMPANY PROFILE -AT&T

Business Sector :Telecom

Operating Geography :North America and Latin America

About AT&T :

AT&T Inc.(American Telephone and Telegraph) helps connect millions around the globe with its winning suite of entertainment, business, mobile and high speed internet services. AT&T is a public company incorporated in 1983, which provides communication and digital entertainment services primarily in the United States, along with Mexico and Latin America. They have their headquarters and corporate offices in Dallas, Texas. In 2015, AT&T acquired DIRECTV by spending $50 billion which made AT&T the world’s largest TV subscription provider. As of 2017, the company is known to have employee strength of more than 200,000 people. AT&T operates as distinct and well-established brands namely, AT&T Communications providing video broadband and voice services, AT&T Mexico for wireless business, DIRECTV as TV subscription provider and AT&T startup for premium video advertising. Though AT&T has seen continuous ups and downs in its business, its performance has been reinforced by some factors like a huge subscriber base, competitive pricing plans, low cost management, share buyback events and traction for its broadband, video and telephone services.

AT&T's mission is "To create the best entertainment and communications experiences in the world." AT&T’s vision is “to design and create in this decade the new global network, processes, and service platforms that maximize automation, allowing for a reallocation of human resources to more complex and productive work.” The USP or Unique selling proposition of AT&T is in being one of the oldest and largest provider of mobile & fixed line telephony in the US and in being the industry pioneer for offering diversified services and products in the telecommunication industry. Amongst the ranking of telecom operators based on brand value in 2018, AT&T bagged the first position with its value pegged at $82 billion.

Competitive Analysis of AT&T

SWOT

PESTLE

AT&T SWOT / TOWS analysis is a framework to evaluate the internal and external factors that create an impact on the telecommunication industry and largely on AT&T Inc. AT&T's internal analysis helps to understand the strengths and weakness of the company whereas, the external analysis gives insights into the opportunities that can act as major growth drivers for AT&T and help build revenue opportunities in this digital era. The report also gives a comprehensive overview of the threats posed to the telecommunications ecosystem. Telecommunication industry is helping firms from various sectors to render online services to their customers, through digitization. Today the core purpose of mobile devices is not meant for communication only, but instead it has transformed into a life management hub. Controlling communication services in the digital era is indeed a major strength for the telecom operators.

AT&T is not only the largest telecommunication and broadband operator in the US but the world’s largest communication company in terms of revenue. AT&T’s revenue and brand position offers it a major competitive advantage, which has kept the company ahead of its competitors, consequently, AT&T is a global market leader in the telecom industry. From TV subscription provider to wired/wireless network provider AT&T offers a broad bucket of products and services.

Telecom industry has always seen ups and downs due to the rapidly changing technology and dynamic behavior of the markets and public preferences, and this weakness of telecom industry has hit AT&T too. Some of the weaknesses of AT&T are the decline in usage of landlines incurring huge financial losses in AT&T landline sector, limited market share and low margins due to high competition in the telecom sector. Despite innovative products and services, AT&T lacks flexibility in their offerings.

The external analysis shows that global expansion in emerging markets, surging demand for mobile phones that support high-speed internet especially amongst millennials, widespread usage of wireless and digital technologies leading to high demand for cloud computing are some of the big opportunities for AT&T. High competition from major competitors in terms of price and quality of services, wavering technology, high maintenance cost etc., are some of the threats impacting the external environment of the company.

The SWOT analysis for American Telephone and Telegraph company is presented below in the matrix:

Strengths

Weaknesses

1. One of the world’s biggest telecom companies
2. One of the world's largest provider of Pay TV services
3. Valuable Assets
4. R&D facilities
5. Building brand value through CSR initiatives

Detailed SWOT Analysis of AT&T

Strength

1. One of the world’s biggest telecom companies: AT&T is the globe's biggest telecom giant after buying DirecTV ranking #1, Global 2000 Rank #11, with a market cap of $249.3 billion as of 2017. It features on rank #9 on the 2017 Fortune 500 list and ranks #1 in Telecom in Fortune’s Most Admired Companies consecutively for the fourth year in a run. With over 99% Americans covered by AT&T, it has a whopping subscription base of 400M in North America under 4G LTE network. The Company's formidable presence spreads over 200 countrieswhere it offer mobile telephony and data services. Asof 2018, the Company serves 157 miilion wireless customers in US and Mexico which is a 14% growth over 2015, dishes out 16 million internet connections and 3 million business customers.

AT &T's operates through four key business segments, the first being Business Solutions which provides communication services to business customers and individuals subscribing to wireless services through employer-sponsored plans and clocked revenues of $69 billion in 2017.AT&T’s Entertainment Group which earned revenues of $51 billion in 2017, offers video, internet, telephony, and interactive and targeted advertising services to consumers in the U.S.A. The remaining two sectors include Consumer Mobility providing nationwide wireless service to consumer and wholesale subscribers and International offering wireless services in Mexico to consumer and business customers, and video entertainment services in Latin America via satellite technology. Each of these recorded revenues of $32 billion and $8 billion respectively for 2017.

2. One of the world's largest provider of Pay TV services: AT&T connects millions of people across the globe with state-of-the-art entertainment, mobile, high-speed internet and voice services. Currently, the company is one of the world’s largest providers of Pay TV with customers in the U.S. and 11 Latin American countries. It powers businesses across the globe tooffer enhanced customer service with mobility and highly secure cloud solutions. In 2015, AT&T had acquired DIRECTV and with this acquisition it transformed on-demand-content entertainment. With the launch of DIRECT NOW in 2016, subscribers could stream their favorite entertainment on any compatible device via the World Wide Web.The reach of DITRECT NOW is huge, it is accessible in more than 90 markets, to over 80% of America's TV users. As of 2017, they have 47 Million linear Pay TV connections including Sky Mexico and 1.2 Million DIRECTNOW subscribers. AT&T is also the leading provider of pay television services in Latin America and holds a 41% stake in Sky Mexico.

3. Valuable Assets: AT&T has multiple intangible assets – licenses, other wireless licenses and orbital slots, customer lists. It is a US-centric Company with the biggest capital investment in the country of $140 billion over the past 5 years. An ultra-fast 100% fibre network is expanded by over 80% to reach 7 million customer locales across 67 metro cities in the U.S.A. High speed fibre connections connect 1.8 million business sites in America. FCC and wireless licenses endow the company with exclusive right to utilize certain radio frequency spectrum to provide wireless communications services. Orbital slots are spaces in which the company operates the broadcast satellites that support the digital video entertainment service offerings. AT&T owns and operates more than 40,000 Wi-Fi hotspots at popular locations such as restaurants, hotels and more. AT&T’s customer lists, licenses and goodwill values have increased significantly in 2016 compared to the previous year.

4. R&D Facilities: The Company has a technology outreach program, which aims at venture capital funded start-ups, to introduce new solutions, products and applications developed by third parties. AT&T also has a research agreement with Ericsson. In 2015, the research and development expenses were $1,693 million and $1,730 million in 2014.

5. Building brand value through CSR initiatives: AT&T extended generous support during tough times of natural calamities like Hurricanes Harvey, Irma, Nate and Maria, multiple earthquakes in Mexico and wildfires across Northern California by keeping customers connected to their friends, family and businesses through free text, call and video. The company deployed its fleet of network recovery technologies to its full potential, including drones, Cell on Wheels, Cell on Light Trucks, emergency communication vehicles and portable and fixed generators. During these spate of natural disasters, AT&T provided unlimited calls, texts and data for its customers in all impacted areas. Additionally, the company rolled outmany text-to-donate initiatives for customers and internal giving campaigns for its employees in order to support recovery efforts.

AT&T is also working untiringly to improve lives though support of local communities.With their signature education program, AT&T Aspire, they invested $400 million to help provide access to education and train people to procure and maintain good jobs. Their"IT CAN WAIT" campaign has inspired 20 million pledges to never text and drive. In Mexico, AT&T is recognized as a Socially Responsible Company by the Mexican Center for Philanthropy (Cemefi) and Alliance for Corporate Social Responsibility (AliaRSE). In Latin America and the Caribbean, through Generación DIRECTV, the Company has played a pivotal role in transformation of communities, with their sturdy focus on education, volunteerism, philanthropy and sustainability through initiatives like Escuela+, Piedra, Papel and Tijera conducted over a period of more than 10 years to improve local communities.

Weakness

This section is available only in the 'Complete Report' on purchase.

Opportunity

This section is available only in the 'Complete Report' on purchase.

Threat

This section is available only in the 'Complete Report' on purchase.

The PESTLE/ STEEPL/ PEST analysis report of AT&T Inc. gives detailed information about the impact of the macro environment on the company. The external analysis helps to understand how all the six external factors, namely, political, economic, technological, legal and environmental affect AT&T. The PESTEL analysis of AT&T is a strategic tool to understand how current trends in the telecommunication industry impact AT&T.

Political and legal factors play a vital role in foreseeing AT&T’s business performance in terms of profit and economic growth in a country. Setting up its base in emerging markets is a golden opportunity for the billion dollar American telco, however AT&T is bound to abide by the laws and regulations like network licensing, tariff rates, trade barriers etc., imposed on the telecom industry by global and local government bodies. On the other hand the telecommunication industry attracts political risks that revolve around factors like national security and human rights.

The external environment analysis shows that social factors are favorable for the telecom industry. Today public's keen interest towards internet especially in social media, for business and entertainment purpose, is quite high.80% of the audience have opted for smart phones with network supporting high-speed internet. Clearly these are some great opportunities for AT&T Inc. Telecom industry is completely dependent on technology and hence the technological factors wield a colossal impact on development and business growth. Telecom industry is the frontrunner to reap rich dividends off current technological trends like digitization, high usage of computers and cloud computing. Nonetheless disposal of e-waste like smartphones, tablets, laptops, and computers are pertinent threats to the environment and Telcom operators are struggling to find solutions to this plaguing problem. AT&T has invested in recycling processesfor theproduced e-waste.

The PESTLE / PESTEL analysis for American Telephone and Telegraph company is presented below in the matrix:

Political

Economical

1. Contributions to election parties and public policy engagement

1. Slowing economy can adversely impact revenues
2. Corporate tax reforms to boost economic activity in the United States
3. Increasing internet usage and penetration to enable economies of scale

Detailed Pestle Analysis of AT&T

Political

1. Contributions to election parties and public policy engagement: Public policy and governmental regulations not only impact telecom companies’ shareholder interests but also its abilities to meet customer requirements and develop appropriate solution for them. AT&T states that it actively participates in public policy dialogues to put forward its perspectives relating to policies related to the telecom, media and other related fields. AT&T also provides support to political organizations and candidates which have positions that align with AT&T’s core goals. Through Political action Committees, employees voluntarily join together to contribute to political campaigns and effectively participate in the electoral process. The company has also mandated that no corporate politicalexpenditure more than $1,000 is made without CEO’s approval.AT&T strictly follows all state and federal reporting and other political action committee requirements and restrictions.

Economic

This section is available only in the 'Complete Report' on purchase.

Social

1. Growing demand of online video content: There has been a rapid rise of on-demand Content consumption through digital platforms in the United States. Among the digital devices, mobile devices have taken over as the preferredmedium of consuming online media. Consumers are increasingly wanting more freedom on what they want to watch according to their lifestyle and preferences and on-demand content gives them the choice and flexibility. Further according to 2016 data, more than 20 million U.S. households who have dropped cablesubscriptions or are thinking about the same. With offerings such as DIRECTV NOW, FreeVIEW and Fullscreen, AT&T can leverage on this growing consumer trend.

Technological

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Legal

This section is available only in the 'Complete Report' on purchase.

Environmental

1. Investments in building environmentally sustainable operations: Environmental and consumer sustainability with regards to usage of raw materials is critical for consumer-centric organizations such as AT&T. The company has built environmentally sustainable facilities, invested in a fleet of fuel-saving hybrid vehicles, and encouraged reuse and recycling in its productions. AT&T has committed to spend up to $565 million in deploying more than 15,000 alternative-fuel vehicles over the next decade.The company also leverages its media channels to raise awareness of environmental issues and encourage its stakeholders to conserve resources by making small changes in their daily actions.

The merger will increase its media holdings. This merger is being valued at $85.4 billion.

FiberTower Corporation

Wireless Service

2018

Acquisition

The acquisition gave it millimeter wave spectrum that will be put to work later in 2018 to begin the rollout of mobile 5G services.
AT&T paid $207 million to acquire FiberTower and will receive a significant footprint in the 39 GHz band, with average holdings of more than 375 MHz in the top 100 markets.

Vyatta Network Operating System

Free Community Software

2017

Acquisition

The acquisition complemented and drove the network transformation. It brought expertise in routing technologies, distributed systems, network-virtualization and software-defined services

Source: Company website and other reliable sources. The detailed table is available in the Complete Report.